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  • Signing of Japanese ODA Loan Agreement with Kenya: Stabilizing the domestic power supply and stimulating economic activity through the construction of a geothermal power plant and related facilities

Press Releases

March 10, 2016

Signing of Japanese ODA Loan Agreement with Kenya: Stabilizing the domestic power supply and stimulating economic activity through the construction of a geothermal power plant and related facilities

photoSigning ceremony

On March 9, the Japan International Cooperation Agency (JICA) signed a loan agreement with the Government of the Republic of Kenya in Nairobi to provide an ODA loan of up to 45.69 billion yen for assistance for the Olkaria V Geothermal Development Project.

This project will construct a geothermal power plant (two units with an output of 70 megawatts each), steamfields, power transmission lines (approximately five kilometers in length) and related facilities at the Olkaria geothermal area in Nakuru County, located in central Kenya.

Kenya has achieved steady economic growth in recent years averaging around five percent per year, and the accompanying demand for power is expected to grow about 14.5 percent each year between 2010 and 2020. The peak power demand in Kenya was 1,512 megawatts in 2015, and approximately 37 percent of that came from hydroelectric power, which is unstable due to its susceptibility to the frequent droughts and other unfavorable conditions in recent years. In addition, Kenya faces the problem that thermal power, which is the second largest source of power after hydroelectric power, is one of the factors behind the country’s current-account deficit in fuel imports. Ensuring a stable power supply to replace hydroelectric and thermal power is a priority for meeting the power demand that is expected to continue rising and enabling steady, sustainable economic growth.

To assist in increasing the power supply in Kenya, JICA has provided Japanese ODA loans for the Mombasa Diesel Generating Power Plant Project (operation inception in December 1999), the Sondu/Miriu Hydropower Projects (1) and (2) (operation inception in February 2008), and the Sondu-Miriu Hydropower Project Sang'oro Power Plant (operation inception in July 2012). The Olkaria I Unit 4 and 5 Geothermal Power Project (operation inception in February 2015), which preceded this project, was completed in January with the first Japanese ODA loan in the geothermal field in Africa. In addition, the Olkaria-Lessos-Kisumu Transmission Lines Project (ODA loan signed in December 2010), which is currently underway, is expected to provide synergistic effects with the current project in providing a stable supply of power from Olkaria to large cities such as Nairobi and Kisumu.

As technical cooperation in the geothermal field, JICA is carrying out the Project for Capacity Strengthening for Geothermal Development in Kenya (September 2013 to September 2017) in cooperation with the Geothermal Development Company of Kenya. The project has the objectives of reducing the technical risk involved in selecting suitable drilling locations and improving the technology for the appropriate supply of steam. The two organizations are also implementing the Project for Reviewing GDC’s Geothermal Development Strategy (February 2014 to March 2016) with the objective of updating Kenya’s geothermal development plan. In January of this year, JICA dispatched an advisor to Kenya to promote the participation of private capital (independent power producers) in the power field. JICA is thus supporting an increase in the power supply in Kenya in terms of both soft and hard components.

In addition to these activities, JICA is working to further increase and stabilize the strained power supply in Kenya through the current project, thereby contributing to economic development through an improved living environment for residents and a better investment environment. It is expected that the increased production of geothermal energy, which is a renewable resource, will greatly reduce the air contaminants and carbon dioxide emissions compared to a similarly sized thermal power station.

In August, the Sixth Tokyo International Conference on African Development (TICAD VI) will be held in Nairobi, the first time for TICAD to be held in Africa, and it is expected that implementation of this project will deepen the development relationship between Kenya and Japan.

Reference
1. Terms and Amount of Loan

Project title Amount
(million yen)
Annual interest rate (%) Repayment
period
(years)
Grace
period
(years)
Procurement
Project Consulting services
Olkaria V Geothermal Development Project 45,690 0.2 * 30 10 General untied

* Not included in the loan.

2. Executing Agency
Kenya Electricity Generating Company
Address: Stima Plaza, Phase III, Kolobot Road, Parklands P.O. Box 47936-00100 GPO, Nairobi, Kenya
Phone: +254-20-3666000, fax: +254-20-2248848

3. Planned Implementation Schedule
Completion of project: December 2019 – with the conclusion of the warrantee period
Consulting services (including construction supervision): Already hired by the executing agency
Tender announcement of initial procurement package for international competitive bidding on project construction:
Procurement package titles: Lot 1: Procurement and Construction of Steamfield
Lot 2: Power Plant Construction
Lot 3: Transmission Line and Substation
Release date: End of March 2016

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